21st Century IRS Act targets ‘severely outdated’ tax IT systems, would codify CIO position
Legislation intended to modernize the IRS’s IT systems passed the House this week with provisions that would officially create a chief information officer position for the agency.
The 21st Century IRS Act, introduced April 10 by Rep. Mike Bishop, R-Mich., would require the IRS to create individual online accounts for taxpayers (or their return preparers) where they could find information, make payments and more. The bill also would require the IRS to create an online platform for Form 1099 filings.
The legislation also would codify the position of CIO within the IRS, with a mandate to “develop and implement a multiyear strategic plan for the information technology needs” of the agency. The IRS currently has a chief technology officer position that essentially serves as CIO and reports to the deputy IRS commissioner for operations support, according to a 2015 IRS manual last reviewed in September. Gina Garza serves in that position, though she identifies as the chief information officer and has testified before Congress as such several times in recent years.
The bill is intended not only to help individual taxpayers, Bishop said, but also push the IRS to improve its infrastructure.
“One of the most common, heartbreaking issues folks from Michigan reach out to my office for assistance with is identity theft,” Bishop said in a statement. And often these issues are “compounded,” Bishop added in comments on the House floor, by the “severely outdated” IT systems at the agency.
The individual accounts would have to be up and running by the end of 2023. The bill also would ask the Department of the Treasury to work with private industry to find ways to encourage more people to file taxes online.
“As a former tech CEO, I was astounded to learn that the IRS is still using fax equipment to conduct regular business and has IT systems still running from the 1960s,” Rep. Susan DelBene, D-Wash., said in a statement. “It is long past time for the IRS to enter the digital age. The 21st Century IRS Act will enhance IRS security measures to keep taxpayers safe from fraud and give hardworking Americans more peace of mind. It will also make it easier for people to submit tax forms online while easing burdens on small businesses. Much work remains, but these are important steps in bringing the IRS into the 21st century.”
A 2016 Government Accountability Office report found that two central legacy tax systems are among the oldest still in use in the federal government. The Individual Master File and the Business Master File, both the “authoritative data source” for individual and business taxpayer information, are, as GAO estimated at the time, around 56 years old.
A Congressional Budget Office review of the bill stated that the provisions pertaining to IT modernization would pose “significant cost” between 2019 and 2023. The office noted that the IRS has spent $290 million annually on modernization in the past five years, and said it had not yet completed an estimate of how the 21st Century IRS Act would impact this number.
The bill is being pushed forward directly on the heels of the 2017 tax filing season, during which the IRS saw some significant last-minute “technical difficulties.”
Early on the morning of April 17, with the deadline looming at midnight that night, the IRS e-file system, which allows taxpayers to file online, went down. In the end the agency was able to get the system back up and running but extended the tax deadline by one day to midnight of April 18.